XCHRX NG YUET NGOR v. DOUBLE FORTUNE TRAVEL LTD. and Others

1996 No. A2145

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. INTRODUCTION

In this action, the Plaintiff seeks a declaration against each of the Defendants that she is the rightful owner of a diamond ring and damages for being deprived of it. She also alleges that she has been defamed by the 1st and 2nd Defendants, and she seeks an injunction against them and damages. The Defendants applied to strike out her Amended Statement of Claim, under both Ord.18 r.19(1) and the inherent jurisdiction of the court, on the grounds that it disclosed no reasonable cause of action, or was frivolous or vexatious, or was otherwise an abuse of the process of the court. By the time when the summons came before Master Jennings, the Plaintiff had applied for leave to re-amend the Statement of Claim. Master Jennings granted the Plaintiff leave to re-amend the Statement of Claim, and dismissed the Defendants' summons to strike out. The Defendants now appeal against those orders.

THE CLAIM FOR DEFAMATION

2. Only one complaint is made by the Defendants in connection with the cause of action in defamation. That relates to para.16 of the Re-amended Statement of Claim, which reads:

"The Plaintiff would also rely at trial [on] other acts of the 1st Defendant which per se do not convey defamatory imputations and surrounding circumstances to prove malice."

In my view, Master Jennings should not have allowed that paragraph to remain in the Re-amended Statement of Claim. It is unparticularised. It does not set out which acts are to be relied on. As Fuad J.A. (as he then was) said in Perak Pioneer Ltd. v. Carrian Holdings Ltd. (CA 59/85):

"An applicant, who seeks to amend a ... pleading is seeking an indulgence and has to comply with the relevant Rules. The opposing party is fully entitled to object to the amendments on principles laid down by practice and the R.S.C. ... [I]t is no answer to an objection that a proposed amendment lacks particulars, to say that particulars can later be given. Of course, if a pleading lacks particulars, particulars can be asked for in the usual way and ordered by the Court if necessary, but where an amendment is applied for it would be an unusual case where the court would consider it appropriate to allow an amendment to be made which lacks particularity ..."

The fact that para.16 lacks particularity means that leave to amend the Re-amended Statement of Claim with para.16 in it should not have been granted. Accordingly, I vary the order made by Master Jennings, and I refuse the Plaintiff leave to Re-amend the Statement of Claim by including para.16 in it.

THE DIAMOND RING

3. The facts on which the claim relating to the diamond ring is based are clearly pleaded. The 1st Defendant ("the company") is a travel agent. It is licensed to sell United Airlines tickets. United Airlines established a promotion to encourage travel agencies to sell United Airlines tickets. When a travel agent sold ten United Airlines tickets, a coupon was issued to the travel agent. On completion, that coupon was returned to United Airlines for inclusion in a draw. The winning coupon in the draw would entitle a person named in the coupon to a prize.

4. The practice within the company's office was that the coupons would be distributed to the Plaintiff, who was employed by the company as the supervisor of ticketing services, and the 3rd Defendant, who was employed by the company as the travel consultant to the ticketing service. The coupons were distributed according to the number of tickets which the Plaintiff and the 3rd Defendant had issued. The Plaintiff and the 3rd Defendant would then complete the coupons which they had been allocated, by putting their own name and identity card no. on each of them. One of the coupons which bore the Plaintiff's name won first prize in the draw, namely a one-carat diamond ring. The Plaintiff's pleaded case is that the company disputed her right to the prize, and claimed that either the company, or the 2nd Defendant (the Managing Director of the company) or the 3rd Defendant should be the rightful recipient of it. As a result, United Airlines refused to hand the ring over to the Plaintiff. They said that they would be withholding it until the Plaintiff's dispute with the company had been resolved.

THE CAUSE OF ACTION RELATING TO THE RING

5. On these facts, does the Plaintiff have a cause of action against the Defendants or any of them in relation to the ring? Mr. Albert Poon for the Plaintiff disavowed before Master Jennings any intention to rely on malicious falsehood. He asserted that the Plaintiff's cause of action was in conversion and detinue. I do not see how the Plaintiff's cause of action can be in detinue, because it is not alleged that the ring is being "detained" by any of the Defendants. It is being "detained" by United Airlines, albeit because United Airlines was told that its ownership was in dispute. But what about the tort of conversion? In the U.K., the pleaded facts would not amount to the tort of conversion. Section 11(3) of the Torts (Interference With Goods) Act 1977 provides that "denial of title is not of itself conversion". But the 1977 Act has not been reproduced in Hong Kong. In Hong Kong, the question is governed by the common law. There is some doubt as to whether mere denial of title, however absolute, can amount to conversion at common law if it is unaccompanied by any other "dealing" with the goods (see Clerk and Lindsell on Torts, 16th ed., para.13-41), but if the common law recognises denial of title as conversion, the principle is (see Clerk and Lindsell, op.cit., para.13-40):

"There may be a conversion of goods, even though the defendant has never been in possession of them or physically handled them, if he has in some way dealt with them so as to deny absolutely the right of the owner, or to assert a right which is inconsistent with the owner's right."

6. Mr. Benjamin Chain for the Defendants did not initially seek to rely on the limits at common law on the doctrine of conversion by denial of title. That was because in Dicks v. Easy Finder Ltd. [1996] 2 HKC 66, Cheung J. held that the power of the court to grant a declaratory judgment under Ord.15 r.16 is not confined to cases in which the plaintiff has a cause of action. Its effect is to give a general power to make a declaration, whether there is a cause of action or not, at the instance of a party interested in the subject-matter of the declaration. Indeed, the declaration which is sought in this case, namely a declaration of ownership, is within the court's power to grant declaratory judgments as to legal and equitable rights. Of course, the absence of the need for a cause of action to justify a claim for declaratory relief does not apply to the Plaintiff's claim for damages for being deprived of the ring for the time being. That claim has to be struck out if the cause of action of conversion by denial of title is not available on the pleaded facts. I have not had arguments addressed to me on that topic, and for that reason the Defendants have not satisfied me that the claim for damages should be struck out on that ground.

THE DEFENDANTS' ARGUMENTS

7. In a wide-ranging submission, Mr. Chain focused his attack on the Re-amended Statement of Claim in a number of areas. I hope that I do not do his succinct and interesting arguments an injustice when I say that they can be distilled into three separate points:

(i) the facts pleaded in the Re-amended Statement of Claim are not in law capable of conferring on the Plaintiff ownership of the ring;

(ii) it is an abuse of the court's process for the Plaintiff to have sued the Defendants without also suing United Airlines; and

(iii) it is an abuse of the court's process for the Plaintiff to have included a claim for declaratory relief against the Defendants.

8. I reject these arguments. As for (i), it is strongly arguable (a) that the promotion established by United Airlines amounted to an offer by United Airlines to award the prizes advertised in the promotion to those travel agents and their employees who accepted the offer by participating in the promotion, and (b) that the company permitted the Plaintiff to accept that offer by permitting her to complete a number of coupons in her own name.

9. As for (ii), I agree with Mr. Chain that the Plaintiff could have sued United Airlines, on the footing that she has a strongly arguable claim against them for breach of contract. The question, though, is whether it is necessary for her to do so in order to maintain the action which she has brought against the Defendants. I do not think that it is. The Plaintiff's dispute is not with United Airlines. It is with the Defendants. It is the Defendants who it is alleged are disputing her right to ownership of the ring. United Airlines do not know the internal workings of the company's office so as to form a view as to who is the true owner of the ring. Mr. Chain says that United Airlines have to take a view of the matter, but I can well understand the Plaintiff's reluctance to sue them. Technically, United Airlines would not be bound by any declaration made in this action, but it is fanciful to suppose that once the rights of ownership of the ring between the Plaintiff and the Defendants have been determined, United Airlines will not then release the ring to whoever has been declared to be its owner. In the circumstances, I cannot characterise as an abuse of the court's process the decision of the Plaintiff to sue the Defendants and not United Airlines. I appreciate that the Plaintiff is seeking the opinion of the court regarding the beneficial ownership of the ring in order to help her to obtain it from United Airlines. That was the reason why the Court of Appeal was not prepared to let the Defendant inTerrian Ltd. v. Oriental Peer Co. Ltd. [1988] 1 HKLR 246 seek declaratory relief. But that case is completely distinguishable from the present, because in that case the Defendant had no legal or equitable interest in the subject-matter of the declaration. In this case, the Plaintiff has.

10. As for (iii), Mr. Chain argues that the Plaintiff is bringing proceedings against the Defendants in order to pre-empt the proceedings which the company has threatened it will take against her if United Airlines release the ring to her. He submits that in those circumstances the court is unlikely to grant the Plaintiff declaratory relief, and that in any event the Plaintiff's claim is an abuse of the court's process. I reject that argument for the same reasons as those for which I have rejected the argument that the Plaintiff had to sue United Airlines. If it is not necessary for the Plaintiff to sue United Airlines, the claim against the Defendants cannot be defeated by the fact that she could have sued United Airlines but chose not to do so.

THE PROPER DEFENDANTS

11. I have been concerned as to whether all the Defendants are proper Defendants to the claim relating to the ring. Mr. Chain argues that the claims against the 2nd and 3rd Defendants should be struck out. I agree that the claim against the 3rd Defendant should be struck out, because although the company was once alleging that the 3rd Defendant may have been the owner of the ring the 3rd Defendant herself disavows any interest in the ring. However, until the 2nd Defendant ceases to assert a right to ownership in the ring, he must remain a Defendant in the proceedings. It is not sufficient for Mr. Chain to say that only the company can be a defendant to the claim for the ring because it was only the company who told United Airlines that the Plaintiff's right to the ring was disputed. To the extent that the claim for declaratory relief is not dependent on the cause of action of conversion by denial of title, it does not matter who put United Airlines up to not releasing the ring to the Plaintiff. What matters is who is now asserting a claim to ownership of the ring.

CONCLUSION

12. For these reasons, I think that Master Jennings was correct not to strike out the Re-amended Statement of Claim on any of the grounds relied upon, and apart from the variation of his order to which I have already referred relating to para.16 of the Re-amended Statement of Claim, and the striking out of the claim against the 3rd Defendant, this appeal must be dismissed.